Eight Cities to See Fresh Demand of 2.8 Million Housing Units in Next Five Years

The top eight cities in India are expected to see an additional demand of about 2.8 million housing units in the next five years (2013-17) according experts. These cities are Mumbai, National Capital Region (NCR), Kolkata, Bangalore, Chennai, Hyderabad, Pune and Ahmedabad.

MIG and HIG have highest demand

According to property consultant Cushman and Wakefield, India as a whole will see a demand of approximately 12 million units from 2013-17. The eight big cities will constitute about 23% of the total demand. The estimates are based on the estimated growth of population across the country.

Out of the total demand in these eight cities, the majority demand will come from the middle income group (MIG) and the higher income groups (HIG). The demand from these groups is expected to come up to 2.5 million units. The demand for the lower income group (LIG) units is expected to be low in these cities viz. a mere 3,00,000, due to expected increase in income and housing standards.

Supply will be low

Though these eight metros will see a huge demand for housing units, supply will lag behind demand. The cumulative gap between the supply and demand for housing units in the MIG and HIG segments in these eight cities from 2013 to 2017 will be about 45%. The eight cities will see a supply of just about 1.4 million housing units in the MIG and HIG segments. Out of the 1.4 million units, 1 million units will be in the MIG category while the remaining 4 lakh units will be in the HIG category.

Supply low due to economy and regulations

The property consultant says that the supply in housing units will lag behind demand primarily due to regulatory issues and sluggish economy. The proposed bills such as land acquisition bill and real estate regulatory bill will affect supply. While the demand for housing units is expected to grow in proportion to the increasing population, supply is expected to be less aggressive in the short to medium term.

Cushman and Wakefield however notes that a part of the demand for the next two years can be met through the existing stock.

With respect to citywise demand and supply over the next five years, NCR is expected to see a demand of about 7,78,000 units and a supply of 6,06,000 units in the MIG and HIG segments. Mumbai is expected to see a demand of 2,25,000 units and supply of 2,14,000 units.